When procedures don't make financial sense, hospitals are reluctant to provide them, even if the clinical outcome would be better.
There are two ways (well three) of solving this problem: 1) Ask CMS to increase reimbursement and 2) Reduce per-procedure costs. The problem with the second option is that hospitals are already running extremely lean, and since cost categories like facilities, electricity or assets cannot easily be cut in the short term, the EP lab’s option in terms of cutting costs are really just in two categories: Labor or technology. Hospitals can hardly reduce their over-worked staff more than they already have, and fast technology development in this space means technology prices are going up, not down. Ironically, most newer technologies are designed to map faster or otherwise reduce procedure time, which saves costs (theoretically), but the increased price of the new technologies cancel out the cost advantages of shorter procedures. The third solution, of course, is to continue to constrain the adoption of atrial fibrillation ablation, which is – obviously – not a good option.
Hospitals can hardly reduce their over-worked staff more than they already have, and fast technology development in this space means technology prices are going up, not down.
In recognition of this, the last few years CMS/Medicare has increased reimbursement for atrial fibrillation. The challenge is that since technology costs keep going up, CMS is really just playing catch-up, and reimbursement increases are not enough to solve the fundamental financial problem in atrial fibrillation. Recently, CMS/Medicare has implemented new reimbursement rates for 2020: Payment rates for atrial fibrillation procedures that combine an EP study with ablation are increasing by 7.68% to $20,690. The increase of less than $1,500 is less than the cost of a single diagnostic ultrasound catheter and maybe a third of the cost of an ablation catheter. Since new versions of these catheters are launched every year – at a premium price compared to the devices they replace – the increase in reimbursement probably barely covers a single year’s increase in device costs…
...reimbursement increases are not enough to solve the fundamental financial problem in atrial fibrillation.
What really illustrates the problem is that this year, CMS also reduced physician payment rates for atrial fibrillation procedures by more than 7%. So while higher reimbursement enables hospitals to pay more for technology used in atrial fibrillation procedures, physicians are paying part of that cost. As usual, the big winner is the large medical technology company. The losers are the hospitals, the physicians, and the patients who never received an ablation procedure to cure their atrial fibrillation.
One cost cutting initiative that does allow EP labs to reduce technology cost is single-use device reprocessing. Please read the case study we just published about Allegheny Health Network. Innovative Health and S2S Global helps Allegheny Health controlling new costs and offsetting increasing costs to free money – potentially to increase or make profitable CMS reimbursed atrial fibrillation procedures. The health system saves more than $800,000 in single-use EP reprocessing. In the words of Todd Senard, Manager, Clinical Contracts - Strategic Sourcing for Allegheny Health: “As the Electrophysiology space continues to grow, S2S Global and Innovative Health have done a good job in helping us controlling new costs and enabling us to offset increasing costs and free money for new projects we wouldn’t have been able to look at otherwise.”